Costco Struggling in Online Race

Can warehouse giant compete with Amazon?

Costco wants you inside their warehouse store, and not necessarily shopping online.

"If consumers go into the store they tend to buy a lot more," said San Diego State marketing professor Miro Copic. He says while traditional retailers like Target and Walmart are making big investments in the e-commerce side of their business, Costco may be falling behind.

"You know they have been very slow at their online presence and really promoting online purchasing as well as mobile purchasing," said Copic.

Copic says the growth rate in traditional brick and mortar stores is a fraction of the rate of growth for online stores. But Costco has taken its time in creating a competitive online store.

At the same time Amazon is looking at increasing its grocery delivery service and offering bulk items, both could take a bite out of Costco.

"They are going to butt heads much more in the next couple of years," said Copic.

Costco may be hesitant to expand its online presence because the store benefits when shoppers go into their warehouse locations. According to Copic, if consumers go into the store they tend to buy a lot more. Costco's business plan is to keep rotating their inventory and to offer extras for shoppers like free samples.  That's something they can't do online.

"If you've been in a Costco store and you see they have different things on display or different things you can taste, it's like I'm going to buy this, I'm going to take it home, "said Copic, "and that's where Costco really wins.

Contact Us